Financial firms and banks aren't biting their nails waiting to see how the deadlock over the financial sector charter will be broken.
Last year, eight of the top 15 empowerment companies were financial sector firms with scores of more than 67%. This year, only five of the top 15 companies come from the financial sector: Hosken Consolidated Investments (HCI), Nedbank, Glenrand, FirstRand and Standard Bank.
But there are nine financial sector companies with scores above 67% - more than last year - in a list that now includes Discovery, Investec, Metropolitan and Old Mutual. The most notable improvements came from Nedbank (up from 67,8% last year to 82%), Glenrand (68% to 79%) and Old Mutual (50% to 69,2%).
Empowerdex research manager Stephen Hawes says HCI predictably came out on top, "which reflects the fact that they pride themselves on being a black-owned" company. HCI is owned by the SA Clothing & Textile Workers Union (Sactwu).
Old Mutual's improvement, according to Hawes, is a reflection of the fact that some companies provided better data than last year. But the fact that some companies have improved their ratings reflects well on these companies, and badly on squabbling politicians.
A spat has now been dragging on for more than a year between the banks and "community groups" led by the SA Communist Party and Cosatu about how much shareholding finance companies need to sell to black investors. With half an eye on the Banks Act requirements, the financial sector charter specified that finance firms need to sell only 10% of their shares to black investors directly, with another 15% to be held by blacks "indirectly".
But the codes of good practice, drawn up by the department of trade & industry and implemented in February 2007, wants 15% of shares held directly by blacks, and 10% indirectly. The SA Communist Party wants finance companies to comply with the codes, rather than the charter. Understandably, this leaves a lot of financial companies wondering what to do.
Hawes says the improvement in financial firms reflects the fact that they are trying to comply with the charter and the codes. He says that if the reporting switched to the codes, then a lot of "good requirements" in the charter - such as compelling firms to provide access to finance and fund small business - will be lost. "It's a difficult situation."
Glenrand MIB, one of the most improved finance companies in this year's TEC, is evidence of this uncertainty. It now says it has "already started the process of aligning our BEE strategy and targets to those specified in the codes".
So which one will prevail?
Banking Association MD Cas Coovadia says the situation remains at an impasse. "We've done all we can," he says. But a compromise looks unlikely. In a recent interview, he said increasing ownership to 15% would be unworkable. "Some of the BEE deals, which have 10% direct black ownership, are under strain. What would the effect be if we increased ownership to 15%?"
Banks would also struggle to sell anything more than 10%, as this would make the black investors a "shareholder of reference", which means they need to have enough cash to stand behind the bank in a time of crisis.
ANC secretary-general Mathews Phosa has argued that a "compromise" that allows finance firms to sell more of their equity will benefit "people at the bottom of the wealth pyramid". However, there appears to be no evidence to support the view that people at the bottom of the pyramid benefit at all: if anything, it is the black elite who buy the shares who benefit.
Another problem is that some of the commitments in the financial sector charter - such as providing low-cost housing - aren't contained in the codes.
So contrary to Phosa's statements, it seems the "people at the bottom of the wealth pyramid" would actually benefit more from the charter, while those at the top would benefit more if black shareholding were increased to 15%.
